What is rarer than common sense and logic in Washington, D.C.? No, not a homegrown New York Yankee. I’m talking about M&A announcements involving telecom equipment makers. Overture Networks, a carrier Ethernet equipment maker based in Research Triangle, N.C. has acquired Richardson, Texas-based Ceterus Networks, whose technology enables Ethernet services over copper, for an undisclosed amount of money.
Ceterus was founded in 2001 and raised a lot of money from investors including Sevin Rosen Funds, comVentures, Intel Capital and Aldus. They raised $20 million in May 2007, so I’m guessing they must be running low on cash — hence the deal. Overture, by way of comparison, has raised more than $26 million from Lehman Brothers Venture Partners, Morgenthaler Ventures and others.
The combined companies are rumored to have revenues of around $45 million, according to Light Reading, which also reports that it would have 180 customers worldwide, among them TW Telecom, Cable & Wireless and COLT Telecom. I asked Overture how many customers Ceterus will bring to the table, but all they’d say was that with this deal Overture will now have a bigger set of offerings for its customers.
Overture’s reason for the deal: big demand for Ethernet equipment for cellular backhaul networks. As I’ve said before, wireless carriers are seeing a big demand for bandwidth thanks to the rollout of their 3G networks and growing popularity of devices such as Apple’s iPhone. Infonetics Research predicts that demand for wireless backhaul gear will hit about $10 billion by 2011.